Shale gas frees Europe from addiction to Putin's Pipe

Shale gas extraction in Western Europe will dramatically change the geopolitical landscape, according to a report by a think-tank backed by the US Department of Energy. The Baker Institute estimates that with shale as little as 13 per cent of Europe's gas imports will come from Russia by 2040, compared to 27 per cent today.

The European Union gets 80 per cent of its gas imports from Russia via the Ukraine. Russian's state energy company, Gazprom, has used its gas exports as a political weapon: most recently turning off the tap to the Ukraine, which affected some European countries as collateral damage. Bulgaria and parts of the former Yugoslavia were badly hit in the Ukraine spat. And it is pertinent to the UK, which is making a unique dash for unreliable renewable energy sources: these need rapidly responding backup. That is a need best filled by gas, although it is extremely expensive to build gas backup to wind, and the backup stations cannot negotiate lower prices.

Venezuela and Iran will also be a bit less cocky, the report suggests.

The Baker Institute also welcomes shale for lowering both domestic energy prices and "the cost of initiatives to diversify the American automobile fleet to run on non-oil based fuels such as electricity and compressed natural gas". The lower prices come from weakening demand for liquefied natural gas (LNG) from the Middle East.

There's more here (60-page PDF/6.8MB): the scenario planning is well worth a look. ®